Toronto: The startup city guide

Posted April 7, 2016. By Eoghan McNeill

One of Toronto’s favourite sons reckons “it’s hot up in the Six”, the city’s nickname being a reference to the 6s in its two area codes, 416 and 647. Drake isn’t shy about telling the world about what’s going on in Toronto. Its startup founders aren’t as confident though.

He says that although there are plenty of Toronto entrepreneurs who are extremely confident about the products they’re building, many don’t focus on being world-beaters. They just want to build a business. Oversell your startup and you also run the risk of coming across too American.

“A lot of founders here don’t have that killer mindset. Americans think everything they do is awesome and that they’re all going to become market leaders and make a tonne of money. We don’t think that way. I don’t think that’s our temperament,” says Mark.

Shopify IPOd at a valuation of $1.27 billion. While the company is headquartered in Ottawa, the move will bring confidence to the Toronto startup scene, as well as a number of potential new angels. Toronto’s own successful serial entrepreneurs, such as Daniel Debow who founded WorkBrain and Rypple (acquired by Salesforce), bring similar inspiration.

“As you get more entrepreneurs being really successful, it’s going to make startups in Toronto more confident. I think it’s just a matter of time,” says Mark.

Toronto entrepreneur Daniel Debow’s (seated far right) startup Rypple was acquired by Salesforce in 2012 – his success will bring confidence to other startups in his hometown

Startup life in Toronto

Talk to people in Vancouver, Ottawa or any other Canadian city and they don’t like admitting one thing. Even though it’s not the capital city, Toronto is really the epicentre of Canada. The city is the country’s financial hub and centre of business. Its startup ecosystem outperforms both Vancouver and Montreal in output, value and market reach.

“Toronto is the New York of Canada. It’s natural that the startup community evolved here. I think it’s no surprise that if there if there was going to be a vibrant startup community in Canada, it would be in Toronto,” says Erin Bury, 88 Creative Managing Director and former Managing editor of tech news site Betakit.

Toronto’s proximity to nearby Waterloo, considered the hi-tech hub of Canada, has supported the growth of the city’s startup scene. Waterloo is a 45-minute drive from Toronto and home to its own ecosystem, which is focused mainly on engineering talent.

The University of Waterloo is well-known for producing some of the top developers in Canada, many of whom choose to work in Toronto upon graduating, while Google recently opened an office in the city.

A tour of Google’s Waterloo HQ

Consistently ranked as one the best cities in the world in which to live, Toronto is a city of neighbourhoods, where diversity is a defining characteristic. A 2006 census found that almost half of Toronto’s inhabitants were foreign born and it’s often claimed the city is the most diverse in the world. Today the workforce of Toronto startups is 48 percent foreign.

“Walk down the street in Toronto and you’ll probably see 50 nationalities in one day. There’s just a real air of acceptance here,” says Erin.

Having become an angel herself, she decided to launch the project, which is the world’s first online education platform for potential female angel investors.

Female Funders’ Katherine Hague talks the challenges in digital business

Female Funders serves the dual purpose of increasing diversity in the city’s investment network and also helping Toronto startups go up against those from more traditional tech cities.

“Because we have this sense of being underdogs, there is this idea that Toronto entrepreneurs who achieve any modicum of success need to reinvest that money into the next generation of entrepreneurs,” says Erin.

For the ecosystem to compete at a global level however, startups in the city need more ready access to capital. The 2015 Startup Genome Report ranked Toronto 18th worldwide on this score, noting in particular the difficulty of securing a Series B in the city.

The success of Wattpad was a major catalyst in kickstarting Toronto tech

“They barely spent any of it. They were cautious about how they spent money because they weren’t sure if they could get more. Americans raise a big round, they’ll blow their brains out on marketing and sales. In Canada you don’t have that luxury. You have to be a little more pragmatic about capital,” says Mark Evans, a Toronto-based startup marketing consultant.

The city has cost and quality of living, a reasonable abundance of talent and an emerging angel network on its side. Toronto has an opportunity to become a real player in the global startup ecosystem. Maybe startups in the city just need to shout a little louder about their achievements.

“There’s a lot more activity than capital. We’re just suffering from a lack of investment right now. We have a good story to tell. We just have to be a little more vocal,” says Mark.

Toronto’s CN Tower – The city has a story to tell, does Canadian temperament stop it being told?

Take it from me

Mark MacLeod has over 15 years’ experience helping fund, grow and exit venture-backed startups. Having served as CFO for leading companies such as FreshBooks and Shopify, he founded SurePath Capital Partners in 2015.

Top accelerators/incubators

Highline– Based in Toronto and Vancouver, Highline is our most active pre-seed accelerator.Founders Institute – Part of the institute’s global network.Creative Destruction Lab – This is very strong accelerator based out of the University of Toronto. It’s particularly good in AI – they launched an AI-focused programme back in 2015.

TechTO– A tech meetup held the first Monday of every month. They usually get hundreds of people coming along.One Eleven – Right In the heart of downtown Toronto. Sponsored by Canada’s largest VC, OMERS Ventures.

Be sure to hit any coffee shop on Spadina between King and College.

Top places to go for a drink/out for dinner

Rush Lane – Ask for the Kenhattan. This is a customised Manhattan made for Ken Seto, founder of gaming studio Massive Damage.The Spoke Club – Members-only spot for the creative and tech community. Awesome rooftop patio.Soho House – Like Spoke, just hipper.Lee Restaurant – Only spot in Toronto where you want to order coleslaw. Trust me. Home of the Brave – A nice hole in the wall on King Street.

The Kenhattan is a must-drink at Rush Lane

Cool coworking spaces

Project Spaces – A founder-friendly coworking spot downtown. BrightLane – A community of entrepreneurs working together on King Street West. Foundery – On the west side of Toronto, right next to the best coffee spots.

What’s your view of startup life in Toronto? What have we missed? What are your recommendations? Let us know on Twitter @WebSummitHQ or in the comments below.

Join us at Web Summit 2017

Web Summit is now hosting 21 independent conferences under one roof. Be there.